Question

Suzy’s Cool Treatz is a snow cone stand near the local park. To plan for the future, the owner wants to determine her cost behavior patterns. She has the following information available about her operating costs and the number of snow cones served.

Month	Number of snow cones	Total operating costs
January	3,500	$5,000
February	3,800	$4,800
March	5,000	$6,800
April	3,600	$5,450
May	4,700	$6,200
June	4,250	$5,950

Suzy uses the high-low method to determine her operating cost equation. What are her estimated costs at 4,470 snow cones? When calculating the variable cost per unit, round your answer to two decimal places before completing your calculations. Do not use dollar signs, commas or decimals in your answer. Input your answer to the nearest whole number

Answer 1

Dete * Calculation - Variable cost a Highest activity Cast - lowest activity Cost T Per unit Highet activity Units- lowest activity unite 6800 - 5000 5000 - 3500 1800 1500 8:20 Pes unit Fixed = Highest cost activity Cost - variable Cost Pelunit x Highest activity units 6800 - 11. 20 x 5ooo) 6800 - 6ooo Costeauation = 8800 +9 1.20x where x is number of unity. - Estimated cost at 4470 Cones 107 al Cost_=_800 + 1020 x 800 + (120 X 4470 800 + 5364 = 86164 otal cost at 4470 Cones is 6164 Take highest activity & Cost incurred at that level & lowest activity & Cost incurred to calculate Cost equation.